The One Big Beautiful Bill Act (OBBBA), enacted on July 4, 2025, changed the outlook for certain solar and wind tax credits included under Section 48E and Section 45Y of the Inflation Reduction Act (IRA). Instead of preserving the timeline created by the IRA, the OBBBA accelerated the phase out of certain clean electricity technologies included under these sections.
The practical effect is that solar and wind projects now face a narrower eligibility window and tighter compliance requirements.
The most important changes are:
The market impact has been material mostly in solar and wind. Business Group E2 reported that more than $34 billion in energy investments were canceled in 2025 (https://e2.org/reports/clean-economy-works-2025-year-end-analysis/). As cancellations increase and electricity prices remain under pressure, the political conversation is focusing on two questions: (1) whether wind and solar credits should be reduced and incentivize more reliable energy sources like nuclear or geothermal, and (2) whether some version of wind and solar may be needed for grid reliability, job retention, domestic manufacturing, and near-term power supply. Despite this, credits like 45X and 45Y have continued to grow and fill the gap left by the effects to solar and wind.
As of May 2026, the congressional debate is centered on the consequences of OBBBA and the rollback of IRA era incentives. The issue is not cleanly divided between democrats and republicans. Some lawmakers are committed to ending support for intermittent sources and focusing on reliable sources, while others in both parties are focused on the economic and reliability consequences of removing incentives too quickly.
The result is a policy split. One side wants to phase out incentives for wind and solar and redirect support toward dispatchable resources. The other side wants to keep at least part of the credit structure in place to protect jobs, support domestic manufacturing, reduce price pressure, and meet new load growth from data centers.
Separate from Congress, the Trump administration has been defending the 2025 restrictions through the courts and federal agencies. In April 2026, a federal judge in Massachusetts issued a preliminary injunction in favor of clean energy advocacy and trade groups that challenged the administration’s approach to renewable energy permitting.
The challenged policies came from a July 2025 memo issued by Interior Secretary Doug Burgum, which stated the goal of ending preferential treatment for what the administration described as unreliable, subsidy dependent wind and solar energy.
The policies require direct Interior secretary approval for many steps in the federal permitting process, block renewable developers from using an online tool designed to streamline environmental reviews, and effectively restrict wind and solar development on federal land.
Burgum criticized the ruling during an April 6, 2026, House Natural Resources Committee hearing and confirmed that the administration would appeal. That appeal keeps the permitting side of the fight active even as Congress debates whether to revisit the tax credit structure.
Based on the current political setup, a full return to the original IRA framework for solar and wind TTCs seems unlikely in the near term. The most likely scenario is a narrower comeback: targeted extensions, transition relief, and technical fixes that preserve credits for projects already in the pipeline, projects tied to domestic manufacturing, or projects needed to serve major load growth from data centers and grid demand. Politics are mixed.
The Trump administration is still pushing against wind and solar preferences, and some lawmakers remain focused on dispatchable generation. At the same time, rising power demand, project cancellations, job losses, and bipartisan interest in energy dominance create pressure to keep some incentives alive. In our view, solar and wind TTCs are likely to come back in the near term in a limited, negotiated form.
However, solar and wind credits have existed for decades, a future without some form of tax incentive related to solar and wind energy seems very unlikely. Reliability, affordability, manufacturing, and AI-driven electricity demand make the economics hard to ignore.